More good news for luxury as Kering’s share price hits all-time high on back of first quarter
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More good news for luxury as Kering’s share price hits all-time high on back of first quarter

Earlier this month, luxury titan LVMH kicked off earnings season for the luxury sector with a strong positive start. At the time, people interpreted these results as a bellwether – and Kering’s first quarter earnings, released this week, support that view. Kering, also French, also a luxury titan, saw its share price rise to an all-time high on the back of its earnings release, which was incredibly positive and driven by demand for its flagship Gucci brand.

Kering’s share price surged following the results

graph 2704 kering

SOURCE: Yahoo Finance

Revenues for the first quarter rose by an incredible 36.5% against the previous year. The biggest contributor to that figure was Gucci, which has seen consistent strong demand for its fashionable wares. The brand saw an incredible 48.7% year-on-year hike in sales to €1.87 billion. Kering’s second-largest brand, Saint Laurent, also reported impressive sales growth for the quarter, rising 12% from the first quarter of 2017 to €408 million.

Kering has repositioned itself over the past few months, jettisoning its more accessible brands, like Puma, and choosing to focus on its higher-end brands. As the luxury sector continues to see improvements, this move is courting praise from investors. In a note released post-earnings, analysts at Barclays reiterated their position: “we believe Kering has a portfolio of brands that offer growth potential far above the sector average”.

The company’s chairman, Francois-Henri Pinault, also released a statement in the wake of Kering’s earning release, saying: “In the balance of the year, we face a high base of comparison and a tough currency environment, but we are confident in the ability of our houses to continue doing better than their peers, leveraging their innovativeness and creative audacity.”

Disclosure

Dominion holds Kering in its Global Trends Luxury Fund.


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